EPB Group plans ACE Market listing to fund factory expansion and debt repayment

KUALA LUMPUR (Sept 26): EPB Group Berhad, a one-stop provider of food processing and packaging machinery solutions, is planning an initial public offering (IPO) on the ACE Market of Bursa Malaysia to fund its factory expansion, repay bank borrowings and bolster working capital.

According to its draft prospectus filed with Bursa Malaysia, the IPO will comprise a public issue of 71.57 million new shares, accounting for 19.24% of the enlarged share total of 372 million shares post-IPO. Additionally, there will be an offer for sale of 40 million shares, representing 10.75% of the expanded share total.

From the public issuance, 19.57 million shares will be made available to the Malaysian public, where 50% — equivalent to 9.78 million shares — will be set aside for Bumiputera public investors. There will also be 21.19 million shares allocated through the pink form allocation. The remaining 30.80 million shares of the total new share issuance will be allocated for Bumiputera investors approved by the Ministry of Investment, Trade and Industry (Miti).

As for the 40 million shares offered for sale, 15.69 million shares are designated for Bumiputera investors approved by Miti, while the remaining 24.30 million shares will be allocated for identified investors.

EPB is primarily engaged in designing, customising, fabricating, integrating and automating production lines for food manufacturing and processing companies. Additionally, the group is involved in the trading of cellulose casings and the manufacturing and trading of flexible packaging materials.

Notably, the group’s net profit has been growing over the last three financial years. Net profit increased from RM6.21 million in the financial year ended Dec 31, 2020 (FY2020) to RM11.92 million in FY2021 and grew further to RM12.65 million in FY2022.

Revenue has followed the same trend over the last three financial years, increasing from RM61.68 million in FY2020 to RM75.71 million in FY2021, and further to RM89.11 million in FY2022.

Net margin for FY2022 stood at 13.78%, an increase from 10.21% in FY2020. This improvement was driven by higher revenue in the food processing and packaging machinery solutions business segment and the trading of cellulose casings business segment.

EPB’s current shareholders include Yeoh Chee Min, who holds an 80.14% stake (18.56% through her spouse Ooi Kim Kew). Following the IPO, Yeoh’s stake will be diluted to 53.97%.

The group does not currently have a formal dividend policy in place. The draft prospectus said that dividends will be paid out of surplus cash generated from its operations after allocating necessary funds for capital expenditure and working capital requirements.

Malacca Securities Sdn Bhd is the principal adviser, sponsor, underwriter and placement agent for the IPO, while WYNCORP Advisory Sdn Bhd serves as corporate finance adviser.